Fungus Wreaks Havoc on Coffee Crop

Colleen Anunu could tell something was off as soon as she lifted the piping-hot cup of Honduran coffee to her lips.

ENLARGE

A worker sprays fungicide on coffee plants affected by a tree-killing fungus known as roya at a coffee cooperative in El Salvador.
Reuters

The Central American country's coffee beans usually produce flavors with "a lot of fruit" and "really heavy developed sugars," says Ms. Anunu, lead buyer at Gimme! Coffee, a roaster and cafe chain based in Ithaca, N.Y.

But at the March tasting in the western highlands of Honduras, "the coffee was very underdeveloped," she says.

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The culprit: an orange-colored fungus called roya, or coffee-leaf rust, that is the scourge of growers across Latin America.

The fungus is hurting production and is expected to cause crop losses of $500 million and cost 374,000 jobs in Central America this year, the International Coffee Organization says.

An orange-colored fungus called coffee-leaf rust has swept through coffee fields from Mexico to Panama, where some of the world's rarest beans are grown, driving up prices. WSJ's Leslie Josephs reports via #WorldStream

Roya is making some of the world's most desired coffee beans scarcer and driving up their prices. Some varieties of Guatemalan coffees now cost about 70 cents more per pound than the global benchmark contract traded on IntercontinentalExchange Inc.'s exchange, up from a premium of 60 cents a year ago, says Andrew Miller, owner of Café Imports, a Minneapolis coffee importer.

The higher cost means gourmet coffee drinkers aren't seeing the full benefit of a steep price drop in the past year. The drop has allowed big roasters like Kraft Foods Group Inc.,J.M. Smucker Co. and Starbucks Corp. to cut prices. Arabica coffee futures have fallen 19% to $1.44 a pound in the past year, largely due to a bumper Brazil crop.

The fungus has swept through coffee fields from Mexico to Panama, where some of the world's rarest and most expensive beans are grown. Roya thrives on the leaves of coffee trees, choking off the source of nutrition for the coffee cherries that encase beans. Afflicted trees produce fewer cherries, and harvested beans are sapped of flavors like "Meyer lemon" and "sugar sprinkle" that draw gourmet roasters like Ms. Anunu.

"It was just so aggressive," says Aida Batlle, a fifth-generation coffee farmer in western El Salvador. The rust resisted three fungicide sprayings on her farms.

Across Central America, production is expected to shrink 16% in the growing season that runs from October to September from a year earlier, the ICO forecasts.

Central American countries produce roughly 10% of the global coffee supply—and some of the world's sweetest coffee. In a sign of the threat to that supply, Starbucks, Green Mountain Coffee Roasters Inc., Folgers maker J.M. Smucker and other big coffee sellers met in April with government agencies and agronomists in Guatemala City for what was billed as an "emergency" summit.

The companies didn't agree to an immediate course of action. For now, regional governments are leading the fight against roya by spending millions of dollars to supply farmers with fungicides.

Contagion

Coffee-leaf rust, a destructive disease, is spreading throughout Central America, denting supplies and diminishing the quality of gourmet coffee beans.

Scientists and farmers say roya will be an even bigger threat next year as the condition of infected trees worsens and the fungus spreads to new farms.

Agencies like the World Bank's International Finance Corp. are considering measures such as low-cost loans to help farmers pay for farming supplies and new rust-resistant plants.

"We obviously have some significant business interest in securing the coffee supply chain," says Lindsey Bolger, the head coffee buyer for Green Mountain who attended the April meeting.

It is difficult for farmers to save a crop once roya is detected on most of the leaves, says Timothy Schilling, executive director of World Coffee Research, a nonprofit group funded by big coffee companies.

If the fungus destroys more than half of a tree's leaves, its owner likely will have to cut the tree off at the stump. Such trees then can't produce coffee beans for three years.

In Colombia, unusually rainy weather in 2008 fueled an outbreak of rust that later grew into an epidemic.

ENLARGE

Colombia is Latin America's second-largest coffee grower after Brazil, but output plunged and prices surged to a 14-year high in 2011.

In the past five years, Colombian growers have replaced about half of their coffee-growing acreage with rust-resistant plants, according to the Colombian Federation of Coffee Growers, an industry group.

This year, coffee production in Colombia is expected to rebound to at least 10 million bags, up 30% from 2012, the group says. Before heavy rains and rust hit, Colombia produced more than 11 million bags a year.

Gourmet coffee roasters say they can make up for some of the Central American shortfall by buying beans from Colombia and Brazil.

Those two countries produce more than one-third of the world's coffee beans.

The overall coffee market's steep price drop in the past year means farmers will have less money to fight the disease.

For Ms. Anunu, rust means she has to look harder for the perfect bean. "It's a lot of work," she says.

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